Local Law 97: Building benefits beyond sustainability - by John Fino

States and cities across the country are passing Building Performance Standards (BPS) that require building owners and managers to comply with specific sustainability metrics that reduce their carbon footprint - New York City is among the latest. Amid challenges filling spaces post-pandemic and the resulting financial strain, achieving zero emissions by 2050 may seem like the last thing on the minds of New York’s real estate sector, however there are myriad benefits beyond compliance to updating your infrastructures to comply with the new BPS. 

New York City’s BPS – Local Law 97 – is one of the most pioneering approaches to reducing emissions and energy consumption throughout the nation. Enforced as of January 2024, building owners for approximately 40,000 New York City buildings over 25,000 s/f are required to meet the new energy efficiency and greenhouse gas emissions limits by the end of this year with even stricter requirements coming into play in 2030. Buildings under a single owner can comply as a single entity, meaning their performance standard is based on the average CO2e per s/f across the portfolio. 

Buildings affected by Local Law 97 must file a report detailing annual greenhouse gas emissions by May 1, 2025, and then by May 1 of every year after. The report must be certified by a registered design professional such as an engineer or architect. Building owners who do not comply risk facing penalties and fines. But that’s not the most compelling reason to upgrade your spaces.

The Unspoken Benefits of Getting Ahead

Frankly, outdated infrastructures come with outdated systems which can cost more money to run and repair. While they require an investment at the outset, upgraded systems can quickly create cost-saving efficiencies. Some of the most impactful systems to upgrade include HVAC equipment and hydronic systems, automation systems and controls, connected digital tools and the analytics they provide, water usage systems, LED lighting and security measures. Reporting your building’s emissions is inevitable sooner rather than later. By ensuring your infrastructure is equipped enough to monitor and report emissions with the help of technology, you’ll save money and time along with ensuring compliance and safety.

Getting ahead of these standards has major benefits not only environmentally but internally. Many city-based buildings have faced challenges attracting and retaining tenants due to economic challenges, changes in work habits, population shifts, etc. Over the last few years, businesses have vowed to prioritize ESG (Environmental, Social, and Governance) and sustainability goals as the worlds carbon emissions are having detrimental impacts on our planet. Building performance standards provide building owners and business leaders with an opportunity to show would-be tenants that their spaces help deliver on statements promised – an enhanced reputation. 

Beyond making good on sustainability goals, infrastructure upgrades can help tenants address the evolving needs of occupants. For example, optimized HVAC systems that provide optimized temperature controls and maintain healthy indoor air quality can make the difference for employees who had been hesitant to return to a physical office.

Steps Building Owners Can Take to Adhere to BPS

New York City officials estimate that about 20-25% of buildings will exceed their emissions limits in 2024 if they take no action to improve their building’s performance. Take the following steps to ensure preparedness: 

1. Think about multiple building systems as a whole. Achieving BPS compliance requires an understanding of how all systems work together, rather than focusing on one building at a time. 

2. Conduct an energy audit of your building to assess precisely what is needed for your specific building to reach BPS compliance. 

3. Seek out funding. States and municipalities will incentivize emissions reductions so there may be local opportunities to access funding to pay for energy-efficient upgrades, as well as performance contracts. 

4. Consider expert solutions. The services needed to operate efficiently can be harmed. Leveraging a connected solution that addresses multiple concerns can help improve your building’s overall performance. 

While Local Law 97 has created ripples across New York City since its inception, its implementation last month has made its implications much more real for the city’s building owners. But looking beyond the “have tos” and “must dos,” real estate professionals can uncover more compelling reasons for making the necessary upgrades to both comply with BPS and to enhance operational efficiencies. 

John Fino is general manager, HVAC, at Johnson Controls, New York, N.Y.